ANNUAL REPORT 2013

We Help LawyersBuild a Better Practice

Missouri

67%of Missouri lawyers choose

The Bar Plan for Lawyers’

Professional Liability insurance

*of the available LPL Market in Missouri.Source: Missouri DIFP Legal Malpractice Insurance Report Statistics Section, 2012 Report

*

The Bar Plan experienced a return to historic norms in 2013, resulting in a profitable year and solid strengthening of policyholder surplus. Net written premiums were up 9% while the total number of open claims dropped by 76 claims.

Our Net Income After Tax of $814,230 represents an 8% return on net earned premium. Our $2,286,064 increase in surplus

represents a 15% year-over-year increase resulting in a Net Written Premium to Surplus Ratio of .6. This ratio indicates a very

strong surplus position for the amount of premium written and is significantly stronger than the generally acceptable ratio of 2 times Net Written Premium to Surplus.

In 2013 we not only retained a very high percentage of our insured attorneys, but we also welcomed back former

insureds and new attorneys to our company as we wrote 10% more new business firms than the previous year. All of this was achieved while holding the line on expenses which are 10% below 2007 levels and essentially unchanged since 2010.

Additionally, our claim reserves remain very conservative as compared to our peers, and showed a redundancy as of

December 31, 2013.

Following this very successful year and recognizing that our Company has gone through a period of significant volatility in recent years, we reviewed reports that evaluate the quality of our current insured base in terms of claims experience.

We are pleased to report that the quality of our current insured base is excellent based on historical claim experience.

Approximately 85% of our insured lawyers have never reported a claim and 93% have loss ratios with The Bar Plan of less

than 65%, which represents profitable business. This is strong testament to our underwriting discipline and effective risk management services.

As we move into 2014 and beyond, The Bar Plan will continue to focus on operating efficiencies and improved customer service, with an emphasis on the use of technology to improve the ease of doing business for our customers and other

stakeholders. Our goal is to meet and exceed their expectations and to provide quality options to everyone regardless of

their level of sophistication or participation in the latest technology.

I recently participated in workshops and exchanges with CEOs of other bar-related insurance companies across the country

who encounter similar challenges and opportunities as The Bar Plan. We shared valuable insights, ideas and experiences

to further improve this unique and important model for serving lawyers. As mutual insurance companies owned by our

policyholders with a mission to serve lawyers over the long term, we offer a unique set of products, services and operational

values not available through commercial carriers. We are grateful to our many colleagues, business partners and customers

who make this all possible.

Best regards,

Karen R. McCarthy

President & CEO

The Bar Plan

Letter From Our CEO

Statutory Statements of Admitted Assets, Liabilities, & Surplus Statutory Statements of Operations & Changes in Surplus

2013 2012Admitted Assets Bonds $23,355 $28,128

Common stocks 11,495 9,891

Real estate - home office 1,662 1,732

Cash & short-term investments 6,473 4,446

Total cash and invested assets 42,985 44,197

Receivables: Premium receivable 3,454 3,154

Reinsurance recoverable on paid losses 203 406

Accrued investment income 182 262

Receivable from subsidiaries 19 196

Federal income tax recoverable 37 19

Premium tax receivable 52 -

Other Assets: Deferred tax asset, net 1,035 936

Electronic data processing equipment 46 49

Other assets 326 257

Total Admitted Assets $48,339 $49,476

Liabilities And Surplus

Liabilities:

Reserve for losses $14,054 $15,296

Reserve for loss adjustment expenses 8,489 10,098

Commissions payable 81 688

Accrued expenses 211 562

Taxes, licenses, and fees - 27

Current federal and foreign income taxes - -

Unearned premiums 5,392 5,323

Advanced premiums 782 592

Remittances and items not allocated 21 43 Accounts withheld by company for accounts of others

118 409

Ceded reinsurance premiums payable 890 561

Payable for securities 8 -

Unclaimed funds 30 16

Payable to subsidiaries 29 -

Profit commission payable 170 194

Provision for reinsurance 171 61

Total liabilities 30,446 33,870

Surplus:

Policyholder contributions 278 288

Surplus note 5,009 5,009

Unassigned surplus 12,606 10,309

Total surplus 17,893 15,606

Total Liabilities And Surplus $48,339 $49,476

2013 2012

Net premiums earned $10,681 $10,455

Losses incurred 4,128 6,428

Loss adjustment expense incurred 2,646 7,976

Other underwriting expense incurred 4,127 4,562

Net underwriting gain (loss) (220) (8,511)

Investment Income:

Investment income, net of investment expenses 524 785

Net realized capital loss on investments - net of federal income tax for 2013 and 2012 of $0 and $0, respectively

159 88

Net investment income 683 873

Other income, net 307 282

Income (loss) before federal income taxes 770 (7,356)

Federal income taxes expense (benefit) (44) -

Net income (loss) $814 $(7,356)

Other changes in surplus:

Net increase/(decrease) in nonadmitted assets 692 786

Refunds of policyholder contributions (9) (14)

Change in net unrealized capital gains/(losses) on bonds and common stock

1,043 202

Change in provision of reinsurance (110) (61)

Change in net deferred income tax (143) (530)

Cumulative effect of changes in accounting principles - 131

Prior year tax period adjustment - 52

Change in surplus 2,287 (6,790)

Surplus, beginning of year 15,606 22,396

Surplus, end of year $17,893 $15,606

Summaries of the Company’s financial position at year end 2012 and 2011 are presented. The Company was audited by the accounting firm of Brown Smith Wallace, LLC. The audited financial statements can be obtained by writing: The Bar Plan Mutual Insurance Company,1717 Hidden Creek Court, St. Louis, MO 63131

(Dollars in thousands) (Dollars in thousands)(December 31) (December 31)

Financials

$$

15%Gain in surplus

since 2012

4.5%Decrease in

expense ratio

63.4%

Loss & Loss

Adjustment Expense

(LAE) Ratio. Lowest

level in the last 10

years

Open Claims | By area of law( as of December 31, 2013)

Average Cost of Closed Claims | By closed year(With indemnity payment, as of December 31, 2013)

2013 saw a continued reduction in frequency of claims as

reflected in the number of open claims. As of December 31, 2013, we had 330 open claims. This is lowest number of open

claims at year-end that we have seen in the last five years.

Despite a reduction in frequency, we continued to see an

increase in severity. Of the claims closed in 2013 in which

expenses were incurred, five claims resulted in payments in excess of $1 million dollars. This is a first for The Bar Plan. However, despite the increase in severity, the majority of

claims closed in 2013 were closed without incurring any

costs.

As in years past, The Bar Plan obtained a number of

successful defense verdicts, summary judgments, victories

on appeal, and acceptable settlements. This is due in large

part to our outstanding defense counsel and cooperative

insureds.

Throughout the history of The Bar Plan, the number one area

giving rise to claims has traditionally been Plaintiff’s Personal

Injury/Property Damage. In 2013 we saw this practice area

move to the third spot, behind Collection and Bankruptcy

(19% of all claims reported) and Real Estate (15% of all

claims reported). We are seeing that claims against our

insureds alleging violations of the Fair Debt Collection

Practices Act are not simply reserved for collection

attorneys; but are a consideration for any practitioner who

represents clients in a collection matter.

The Bar Plan benefits from internal and external audits and a comprehensive risk management program which includes

risk management audits of insureds to reduce the likelihood

of future claims. This serves all insureds, not just those

who undertake risk management audits. We also pride

ourselves in having licensed, experienced lawyers trained

in the intricacies of legal professional liability insurance

and claim handling techniques manage our claims. Our

claims personnel are ready to assist our policyholders with

questions and concerns regarding claim handling and

claim avoidance. They are here to guide our insureds from

initial report through the conclusion of each matter reported

to The Bar Plan.

Looking forward, The Bar Plan expects the number of claims

reported to continue to decrease, but the cost of defending

legal malpractice claims to continue to be significant. As a result, our goal for 2014 and beyond is to continue to

work to keep those costs in check through aggressive and

diligent claims management.

Claims in 2013

2013, our agents attended over 60 law-

related conferences and seminars and

participated on The Missouri Bar’s Solo

and Small Firm Conference steering

committee.

We believe this direct involvement with

those we serve fosters understanding

which allows us to provide better

products and services to meet

the changing needs of the legal

community.

The Bar Plan Insurance Agency, Inc.,

a wholly-owned subsidiary of The Bar

Plan Mutual Insurance Company,

serves a dual role. It provides sales and

customer service support for The Bar

Plan’s Lawyers’ Professional Liability

Insurance and Court Bond programs.

Additionally, it offers an array of

insurance products important to

lawyers including Business Owner’s

Policy, Workers’ Compensation

insurance, and the Group Term Life

Insurance program for The Missouri Bar*.

Our agents work closely with firms who insure directly with The Bar Plan and

independent insurance producers to

ensure they receive quality information

and service to meet their needs.

Our agency team understands the

importance of being connected with

our insureds and the legal community.

We stay connected in a variety of

ways through attendance at legal

conferences, seminars, and social

events, and our participation on

various boards and committees. In * Underwritten by ReliaStar Life Insurance Company, a member of the Voya family of companies. Program available only to The Missouri Bar members.

Agency

The Bar Plan Surety and Fidelity

Company (“Surety”) is a wholly-owned

subsidiary of The Bar Plan Mutual

Insurance Company (“Mutual”) and,

together with the Mutual, operates The

Bar Plan’s Court Bond Program.

The program is licensed is all 50

states and the District of Columbia.

It is marketed and sold directly to

attorneys online and through a

Surety & Fidelitygrowing list of marketing partners in

various states. Marketing partners are

generally selected because of their

expertise and proven track record with

insurance products for lawyers.

The program continued its steady

growth in 2013 and experienced a low

loss ratio, signifying excellent claims

experience.

The court bond program offers various

types of surety bonds that are filed in relation to civil court matters,

including probate. We differentiate

ourselves by offering a 24-hour

turnaround, competitive rates, and

attorney-managed underwriters who

understand the needs of attorneys and

their clients.

538New LPL

lawyers insured

in 2013

424New Lawyers’

Professional Liability

(LPL) firms in 2013

4,000surety bonds in

force in 31 states

Over

$$

5%Gain in Surety

Direct Written

Premium

$11,000Given in law

school scholarships

3,000Attorneys attended

Ethics CLE series

Over

Risk Management Education

In 2013, The Bar Plan Foundation conducted 63 seminars

and the seminar series was presented to over 3,000

attorneys and addressed critical risk management and

professionalism issues.

Annual Golf Tournament & Scholarship Recipients

In 2013, the Foundation’s Tournament Beneficiary was Amethyst Place who received $7,000 to help provide safe

and supportive housing to women recovering from drug

and alcohol addiction, and their children. In addition to our

beneficiary, The Bar Plan Foundation awarded scholarships to the following:

Sara Christensen, the recipient of the Richard P. Sprinkle

Scholarship ($1,000), was a Founder and first Chief Justice of the UMKC –Law School Board of Barristers drafting its

organizational constitution and coordinating its initial writing

curriculum for trial advocacy concepts and skills. She

developed the curriculum for a week-long camp of the Blue

Valley School District for 7th-9th grades on the Bill of Rights

and Students’ Rights and worked with Blue Valley Northwest

High School students in preparing for the State and National

level congressional hearing We the People Competition.

Ashley Grace of UMKC- Law School is The Bar Plan

Foundation’s Roy A. Larson Scholarship ($2,500) recipient.

Rachel contributed a top-ranked Comment to and was the

Articles and Symposia Editor for the UMKC Law Review. She

served as President of the Emissary Program (designed to

attract strong new students to the school), a federal district

court clerk, an intern at Legal Aid, and an intern at the

U.S. Attorney’s Office. She received the Joseph E. Stevens, Jr. memorial Prize for outstanding legal writing and served as Membership Chair for the Association of Women Law

Students.

Aaron Friess attended Washburn University - School of Law

($2,500) where he ranked third in his class. He received the

2013 Judge J. Richard Foth Writing Award for appellate brief writing, served as Editor-in-Chief of the Washburn Law

Journal and served on the Student Committee for Faculty Recruitment.

Scott Sergent, before entering the University of Missouri

- School of Law ($2,500), served for eleven years as a

municipal police officer. As a law student, Scott was on the Dean’s List in 2012/2013, was a member of the Criminal Law

Association and Phi Delta Phi, recognized as the 2012 Top

Moot Court Oral Advocate, attained Eagle Scout status

in 1991. During law school he served as a volunteer in his

children’s Parent Association, as an Assistant Scoutmaster,

and on the Board of Directors of the Columbia Credit Union.

Amanda Hildebrand attended Washington University

($2,500) where she served as Vice President of the

Immigration Law Society, was a member of the Women’s

Law Caucus and worked with the Metropolitan St. Louis

Equal Housing and Opportunity Council tom promote

awareness of equal housing laws and rights for the LGBT

community.

Foundation

The Bar Plan Mutual Insurance

Company

Jerome E. BrantChairman

Liberty, MO

Karen R. McCarthyPresident & Chief Executive Officer

St. Louis, MO

Richard G. SteeleVice Chairman

Cape Girardeau, MO

Kent O. HydeTreasurer

Springfield, MO

Ann P. HaganSecretary

Mexico, MO

Michael J. DelaneyJefferson City, MO

John R. GunnSt. Louis, MO

Brian J. KinmanSt. Louis, MO

Walter R. LamkinSt. Louis, MO

The Bar Plan Insurance Agency, Inc.

Karen R. McCarthyPresident & Chief Executive Officer

St. Louis, MO

Jerome E. BrantSecretary

Liberty, MO

Ann P. HaganMexico, MO

The Bar Plan Surety and Fidelity

Company

Michael P. GunnChairman

St. Louis, MO

Karen R. McCarthyPresident & Chief Executive Officer

St. Louis, MO

John F. BildTreasurer

St. Louis, MO

Phillip D. FraimSecretary

Oklahoma City, OK

John R. GunnSt. Louis, MO

Vanita A. MasseyKansas City, MO

Richard G. SteeleCape Girardeau, MO

William R. StroudCary, NC

Lois M. ZerrerSpringfield, MO

The Bar Plan Foundation Board of

Trustees

Karen R. McCarthyPresident & Chief Executive Officer

St. Louis, MO

Christian A. StiegemeyerExecutive Vice President, Secretary

St. Louis, MO

Keith A. BirkesJefferson City, MO

Kent O. HydeSpringfield, MO

David E. LarsonKansas City, MO

Jennifer L. SchwendemannSt. Louis, MO

Scott E. Seitter Kansas City, MO

Board of Directors

Executive

Karen R. McCarthy President & Chief Executive Officer

Legal & Compliance

Patrick M. O’LearyVice President and General Counsel

Kimberly M. EdgarCompliance Analyst

Tracy E. BrittCompliance Assistant

Underwriting

Gayle E. TegtmeierVice President - Underwriting

Linda J. LangleySenior Underwriter

Linda Herndon BalagnaUnderwriter

Thresa E. BettsUnderwriting Assistant

Carole A. ParisUnderwriting Assistant

Agency Operations

Cynthia L. PulvirentiVice President - Agency

Mark G. BockiusRegional Sales Manager

Annette R. HilyardAccount Representative

Robert D. MurrayRegional Sales Manager

Jeffrey D. ThompsonRegional Sales Manager

Risk Management

Christian A. StiegemeyerDirector of Risk Management

Christina Lewis AbateRisk Manager

Finance

Gregory H. KlausChief Financial Officer

Tina M. DanielsAccounting Manager

Kelly R. TownsendAccountant

Vicky L. BarteauAccounting Assistant

Corporate Operations

Cynthia L. PulvirentiVice President - Corporate Operations

Kathleen M. KeelingHuman Resource Generalist

Mark G. BockiusFacilities Manager

Brenda L. BaumanReceptionist

Taylor N. TownsendReceptionist

Marketing

Susan McCourt BaltzDirector of Marketing

Joseph C. AllenGraphic Designer

The Bar Plan Foundation

Karen R. McCarthyPresident - The Bar Plan Foundation

Christian A. StiegemeyerExecutive Vice President - The Bar Plan Foundation

Christina Lewis AbateRisk Manager

Claims

Teresa M. NiederwimmerVice President - Claims

Valerie L. PolitesSenior Claims Counsel

Charles S. CoffeyClaims Counsel

Christopher E. MeyerClaims Counsel

Janet C. JamesClaims Assistant

Glennis R. WagnerClaims Paralegal

Information Systems

J. Brian BostromDirector of Information Systems

Cynthia J. SanderbeckNetwork Administrator

Katrinna R. BrangenbergSenior Database / Applications Programmer

Michael D. BarnardDatabase / Applications Programmer

Court Bond Program

Kimberly M. EdgarVice President – Surety Underwriting

Cathleen P. AhearnSenior Bond Underwriter

Deborah J. EllerBond Underwriter

Brittney E. BarteauUnderwriting Assistant

Staff

www.thebarplan.com | 314-965-3333 |1717 Hidden Creek Court, St. Louis, Missouri 63131